Today, State Street Global Markets released their latest monthly read of Investor Confidence showing that confidence for North American institutional investors increased 6.0% sinceJanuary while European and Asian investor confidence remained relatively flat to mildly negative all resulting in an increase of 3.5% to the aggregate Global Investor Confidence Index.
Given that that the confidence indices purport to “measure investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors”, it’s interesting to consider the performance surrounding the 2001 recession and reflect on the performance seen more recently.
During the dot-com unwinding it appears that institutional investor confidence was largely unaffected even as the major market indices eroded substantially (peak - trough declines of DJI -37.9%, S&P 500 -48.2%, Nasdaq -78%).
But today, in the face of the tremendous headwinds coming from the housing decline and the mortgage-credit debacle, it appears that institutional investors are less stalwart.
Since August 2007, investor confidence has declined significantly led primarily by a material drop-off in the confidence of investors in North America.
The charts below (click for larger versions) show the Global Investor Confidence aggregate index since 1999 as well as the component North America, Europe and Asia indices since 2007.
